Will Buffett's put' on oil company Occidental stop the share price drop?

Shares of U.S. oil company Occidental Petroleum dropped to $56.17 Tuesday. This is below the level which has triggered Berkshire Hathaway, owned by billionaire Warren Buffett.

Wall Street analysts referred to past multimillion-share purchase as "the Berkshire Put" because they were timed so precisely with drops below $60.

But Occidental's shares have traded below this price for the entire month. This is the longest period of time since a swoon that began in January and ended when Berkshire bought 4.3 million stocks in early February.

Analysts said that the lack of purchases could be due to Omaha, Nebraska investor's choice not to increase his stake by nearly 30%. Berkshire, the largest shareholder of Occidental with a stake valued at $16.1 billion and U.S. regulatory approval for up to 50% ownership of the company, may be the reason behind the lack of purchases.

Berkshire and Occidental's spokespeople did not respond to our requests for comment.

Occidental shares have fallen 12.3% over the past 52 weeks, compared to a flat performance of the XLE Fund that tracks the entire energy sector.

CrownRock LP shareholders this month filed a request to sell 29,6 million Occidental stock shares they acquired as part of Occidental's 12-billion-dollar deal for Midland, Texas oil producer.

Previous drops have regularly triggered large purchases. Berkshire bought 2.56 million shares in June at a price between $59.86 to $59.75 per share. It purchased nearly $590,000,000 in Occidental stock after the prices fell in December due to the debt required for the CrownRock transaction. The trend is to buy large Berkshire shares between $57.91-$61.38.

Berkshire also holds warrants for 83.5 million Occidental shares at $59.62 each, as well as preferred stock. (Reporting and editing by Jonathan Oatis; Gary McWilliams)

(source: Reuters)